Asahi Metal Industry Co v. Superior Court
In Asahi Metal Industry Co v. Superior Court, 480 U.S. 102 (1987), a plurality of the Supreme articulated the "stream of commerce" theory of personal jurisdiction.
The defendant in Asahi was a Japanese manufacturer that produced a "tire valve assembly" incorporated into a motorcycle that was the subject of a products liability action in California. Id., 106.
Justice O'Connor, writing for a four-justice plurality, stated that jurisdiction was not proper because the mere possibility that a product will end up in a forum state does not constitute a "minimum contact".
Instead, the plaintiff must show that the defendant purposefully directed its activities at the forum, such as by targeted advertising. Id., 111-112.
However, concurring opinions by Justices Brennan and Stevens maintain that jurisdiction was acceptable under the minimum contact prong, but failed under the fairness test. Id. 120-122.
In Asahi Metal Industry Co. v. Superior Court (1987) 480 U.S. 102, when the plaintiff lost control of his motorcycle in California, he was injured and his wife was killed. (Id. at pp. 105-106.) The plaintiff then filed a products liability lawsuit in California against the Taiwanese tube manufacturer and alleged that the accident was caused by defects in the motorcycle tire, tube, and sealant. (Asahi, at p. 106.) The tube manufacturer filed a cross-complaint seeking indemnification from, among others, Asahi, which was the Japanese manufacturer of the tube's valve assembly. (Ibid.) After the plaintiff settled with the tube manufacturer and the other defendants, the only remaining claim was the Taiwanese tube manufacturer's indemnity claim against Asahi. (Ibid.) Asahi moved to quash the tube manufacturer's service of summons on the ground that California's exercise of personal jurisdiction over it violated the due process clause of the Fourteenth Amendment. (Ibid.)
The Asahi court expressed differing views on the stream of commerce theory. Justice O'Connor, joined by three justices, concluded that the "placement of a product into the stream of commerce, without more, is not an act of the defendant purposefully directed toward the forum State." (Asahi, supra, 480 U.S. at p. 112.) Instead, purposeful availment requires "additional conduct of the defendant" indicating "an intent or purpose to serve the market in the forum State." (Ibid.) Such examples would include "designing the product for the market in the forum State, advertising in the forum State, establishing channels for providing regular advice to customers in the forum State, or marketing the product through a distributor who has agreed to serve as the sales agent in the forum State." (Ibid.) This approach is sometimes referred to as the " 'stream-of-commerce-plus' " test. (Carretti v. Italpast (2002) 101 Cal.App.4th 1236, 1248 (Carretti).) In contrast to this view, Justice Brennan and three concurring justices observed that the "stream of commerce refers . . . to the regular and anticipated flow of products from manufacture to distribution to retail sale" and that "as long as a participant in this process is aware that the final product is being marketed in the forum State, the possibility of a lawsuit there cannot come as a surprise." (Asahi, at p. 117.)
Justice Brennan reasoned that a "defendant who has placed goods in the stream of commerce benefits economically from the retail sale of the final product in the forum State, and indirectly benefits from the State's laws that regulate and facilitate commercial activity. These benefits accrue regardless of whether that participant directly conducts business in the forum State, or engages in additional conduct directed toward that State." (Ibid.) Eight justices, however, held that the third element, that is, whether the exercise of personal jurisdiction "would offend ' "traditional notions of fair play and substantial justice" ' ," had not been met. (Asahi, at p. 113.) In reaching this conclusion, the court reasoned: "Considering the international context, the heavy burden on the alien defendant, and the slight interests of the plaintiff and the forum State, the exercise of personal jurisdiction by a California court over Asahi in this instance would be unreasonable and unfair." (Asahi, at p. 116.)